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The real revolution…making new markets

There’s a lot of talk about how alternative energy will displace oil, but the real revolution will probably not come by replacing a single ingredient in the jambalaya that is our current energy predicament. It will probably come from making wholly new markets where none existed before. One such market is emerging now: the market for energy savings (see Red Herring’s Checks For Demand-Response). Think of it as Web2.0 for the 100-year old energy industry.

Got any unused energy to sell? Maybe. If you’re big, flexible, and organized. If you are, then you may be able to sell to utilities the ability to turn off your big ticket energy appliances (think HVAC, primarily, but also other major energy drains that you can do without for short periods of time with little advance warning). The idea is called demand-response, and it enables the utilities to avoid those rolling black-outs that shutter entire neighborhoods (causing technical and PR nightmares).

But if you’re not big, flexible, and organized, there’s no market for you. Enter market-makers like Consumer Powerline, which both enables consumers to sell their (potentially) unused power and aggregates many small consumers into a single big, flexible, and organized one. In essence, companies like Consumer Powerline are mimicking utilities by enabling and then aggregating the demand response capabilities of their clients and selling it back to the utilities under peak power conditions.

The interesting idea: using technology to enable and then aggregate many small energy sources (in this case, sources of energy savings) which then can be sold back to the utilities. Once such a ground-up market emerges, the variability in energy demand and production becomes itself a resource to manage and commercialize. Call it Grid2.0, it’s a business model very similar to Web 2.0, in which IT enables, aggregates, and then exploits the value of user-generated content.